United States District Court, E.D. New York
DECISION & ORDER
HONORABLE WILLIAM F. KUNTZ, II UNITED STATES DISTRICT JUDGE
diversity action, Maspeth Federal Savings and Loan
Association ("Maspeth" or "Plaintiff) brings
suit against Fidelity Information Services, LLC
("FIS" or "Defendant") for, inter
alia, breach of two contracts under which Defendant was
to provide Plaintiff with lockbox and remittance processing
services. Specifically, Plaintiff alleges that
Defendant's lockbox servicing procedures were
incompatible with Plaintiffs late fee policy, resulting in
the improper assessment of late fees to Plaintiffs
customers-fees that Plaintiff ultimately refunded in order to
settle a class action lawsuit brought by its customers.
Plaintiff seeks to recover, inter alia, the amount
of the late fees it refunded as well as attorneys' fees
associated with the lawsuit. Defendant now moves to dismiss
Plaintiffs Amended Complaint under Federal Rule of Civil
Procedure 12(b)(6). For the reasons that follow,
Defendant's motion is GRANTED in part and DENIED in part.
is a federally chartered savings and loan association
headquartered in New York that engages in the business of,
inter alia, originating and servicing mortgages
within the Eastern District of New York. Am. Compl. ¶ 1,
ECF No. 13. Defendant is an Arkansas limited liability
company headquartered in Florida that provides banking and
payment technologies and services-including remittance,
lockbox, processing, and conversion services-to banks and
other financial institutions throughout the United States.
Id. ¶¶ 2-3.
case centers on a pair of agreements under which Defendant
maintained a lockbox to which some of Plaintiff s customers
sent their mortgage payments (or remittances) and provided
Plaintiff with remittance processing services. Id.
¶ 11. First, on or about January 22, 2003, the parties
entered into the Master Agreement for Provision of Hardware,
Software and/or Services ("Master Agreement") and
the Lockbox Services Order ("LSO"), both of which
were governed by a set of General Terms and Conditions
("2003 GTCs") (together, the "2003
Agreements"). See Cortegiano Decl. Ex. D; Am.
Compl. ¶¶ 6, 10. Second, on or about April 30,
2013, the parties entered into the Information Technology
Services Agreement ("ITSA") and the
Remittance/Lockbox Processing Services Addendum
("RLPSA"), both of which were governed by a
different set of General Terms and Conditions ("2013
GTCs") (together, the "2013 Agreements").
See Cortegiano Decl. Ex. E; Am. Compl. ¶¶
9-10. Together, these agreements governed the scope of
Defendant's obligations to retrieve and process mortgage
payments made by Plaintiffs customers. Am. Compl. ¶ 11.
In addition, although not specified in the parties'
agreements, the Amended Complaint alleges Defendant knew or
should have known Plaintiff maintained a policy throughout
the relevant contractual period that any remittance received
by 8:00 P.M. on the sixteenth day of the month when due would
not incur a late charge. Id. ¶ 17.
about November 20, 2013, Plaintiff was served with a class
action complaint that had been filed by a group of its
customers, which asserted causes of action for: (1)
violations of the Real Estate Settlement Procedures Act; (2)
violations of section 349 of the New York General Business
Law; (3) breaches of the implied duties of good faith and
fair dealing; (4) breach of contract; and (5) unjust
enrichment. See Amended Class Action Complaint
("ACAC"), Friedman v. Maspeth Fed. Loan &
Sav. &Ass'n, 13-CV-6295 (E.D.N.Y. Nov. 13, 2013)
(Weinstein, J.), ECF No. 17; see also Am. Compl.
¶¶ 24-25. Specifically, the suit alleged, inter
alia, that members of the class were improperly assessed
late fees by Maspeth even though, under the provisions of
Maspeth's late fee policy, their mortgage payments were
timely remitted and delivered to the lockbox. See
Am. Compl. ¶¶ 26-27. According to Plaintiff,
Defendant was solely responsible for servicing the lockbox at
all times relevant to the class action lawsuit, and it failed
properly or timely process remittances or credit
customers' accounts with payment. Id. ¶ 28.
about December 6, 2013, Plaintiff sent a written notice of
claim and demand for indemnification to Defendant, which
notified Defendant of the class action lawsuit and provided
it with a copy of the class action complaint. Id.
¶ 29. On or about December 20, 2013, Defendant
acknowledged receipt of Plaintiff s notice, but it neither
accepted nor rejected Plaintiffs demand and merely stated it
would research the issues in the lawsuit. Id. ¶
30. As a result, Plaintiff undertook to defend the lawsuit at
its own expense. Id. ¶ 31. On or about October
3, 2014, Plaintiff again demanded in writing that Defendant
indemnify it for any losses resulting from the lawsuit,
including but not limited to any late fees it might refund as
part of a settlement, its related attorneys' fees, and
any award of attorneys' fees the court might make to the
class plaintiffs' counsel. See Id. ¶ 32. On
or about October 22, 2014, Defendant notified Plaintiff that
it would not indemnify Plaintiff as against the class claims.
Id. ¶ 33. Thereafter, the parties engaged in
negotiations, but they failed to resolve Plaintiffs claim.
Id. ¶ 34.
about December 19, 2014, Maspeth executed a settlement
agreement to resolve the class action lawsuit, under which it
made available over $200, 000.00 to its customers who were
potential claimants in the suit and agreed to pay up to $535,
000.00 in class plaintiffs' attorneys' fees, subject
to court approval. Id. ¶¶ 35-36. See
generally Stipulation of Settlement, Friedman v.
Maspeth Fed. Loan & Sav. & Ass'n, 13-CV-6295
(E.D.N.Y. Dec. 19, 2014) (Weinstein, J.), ECF No. 48-3. On or
about April 23, 2015, after a motion on notice and a hearing,
U.S. District Judge Jack B. Weinstein approved the
stipulation of settlement by order and judgment and awarded
$535, 000.00 in legal fees to class plaintiffs' counsel.
Am. Compl. ¶ 37.
October 20, 2015, Plaintiff filed this action for breach of
contract, gross negligence, contractual indemnification, and
common law indemnification. See generally Compl.,
ECF No. 1. On December 24, 2015, it filed an Amended
Complaint, which alleges, inter alia, that Defendant
breached the parties' agreements by failing properly to
service the lockbox and process remittance payments in
accordance with Plaintiffs late fee policy, which resulted in
the improper assessment of late fees to Plaintiffs customers.
See Am. Compl. ¶¶ 17-20, 28, 44-47. The
Amended Complaint seeks damages "in an amount not less
than $857, 130.95, " id. ¶ 41, consisting
of: (1) payments to class plaintiffs' attorneys pursuant
to the judgment in the class action lawsuit, id.
¶ 38; (2) payments to qualified claimants who filed
claims pursuant to the approved class settlement,
id. ¶ 39; and (3) legal fees incurred in
defending and resolving the class action lawsuit,
id. ¶ 40.
March 18, 2016, Defendant filed a fully briefed motion to
dismiss Plaintiffs Amended Complaint. See Def. Br.,
ECF No. 18; PL Resp., ECF No. 20; Cortegiano Decl., ECF No.
19; Def. Reply, ECF No. 21.
survive a motion to dismiss under Rule 12(b)(6), "a
complaint must contain sufficient factual matter, accepted as
true, to 'state a claim to relief that is plausible on
its face."' Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting BellAtl Corp. v. Twombly,
550 U.S. 544, 570 (2007)). "A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged, " but
"[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice." Id. A complaint must be dismissed
where, as a matter of law, "the allegations in [the]
complaint, however true, could not raise a claim of
entitlement to relief." Twombly, 550 U.S. at
558. In considering a motion to dismiss, the Court must
accept all of the non-movant's factual allegations as
true and draw all reasonable inferences in the
non-movant's favor. Id. at 555. However, the
Court is "not bound to accept as true a legal conclusion
couched as a factual allegation." Iqbal, 556
U.S. at 678 (quoting Twombly, 550 U.S. at 555)
(internal quotation marks omitted).